DUNDEE REIT $34.37 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 97.0 million; Market cap: $3.3 billion; Dividend yield: 6.4%) owns and manages 22.9 million square feet of office and retail space. The trust has a 95.1% occupancy rate.
In the three months ended September 30, 2012, Dundee REIT’s revenue jumped 71.6%, to $187.3 million from $109.2 million a year earlier. Most of the increase came from properties the trust recently purchased.
Cash flow jumped 67.5%, to $61.3 million from $36.6 million. Cash flow per unit rose 5.2%, to $0.61 from $0.58, on more units outstanding (the trust issued new units to pay for the acquired properties). The units yield 6.4%.
Dundee’s growth-by-acquisition strategy adds risk, but it is steadily diversifying its holdings outside western Canada by purchasing more properties in other parts of the country. At the start of 2010, about 70% of Dundee’s properties were in western Canada. That’s now down to less than 35%.
The trust has now completed the sale of its 77 industrial properties to newly created Dundee Industrial REIT, $10.80, symbol DIR.UN on Toronto. Dundee REIT received $575.9 million, including a 44.1% retained interest in Dundee Industrial REIT. Dundee REIT is now focused on office buildings.
Dundee REIT is a buy.
